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Oil short-sellers' gloom deepens with price stuck below US$55
[CALGARY] Hedge funds are increasingly pessimistic on oil as US stockpiles surge and crude refining plunges.
Bets on a West Texas Intermediate crude rout rose 7.6 per cent in the week ended Oct 15 and have almost tripled since mid-September, data released Friday show. A report showing American crude storage rose for a fifth week while refiners cut processing rates to the lowest since 2017 only reinforced bearish expectations.
"The perception of falling demand is driving prices lower," said Bob Iaccino, market strategist at Chicago-based Path Trading Partners. "No one thinks that demand is going to get higher."
The US benchmark oil price has been stuck below US$55 a barrel since the start of the month. Adding to the gloomy picture for demand, China reported the slowest pace of economic growth since the early 1990s last quarter. A trade war with the US means the world's second-largest energy consumer is likely to keep struggling.
Short-selling of WTI crude rose to 114,709 futures and options, up from 106,578 the week prior and just 39,948 in the one ended Sept 17, according to US Commodity Futures Trading Commission data. Long bets edged lower by 0.1 per cent, to 201,239 contracts. Money managers' net-long position, or the difference between the two, shrank 8.8 per cent.